Destiny Software Productions Inc. Sues Musicrypt
VANCOUVER, British Columbia, May 4, 2007 – Destiny Software Productions Inc., a wholly owned subsidiary of Destiny Media Technologies (DSNY OTCBB) and a leader in online media solutions, announced today that it has filed a lawsuit in Ontario Superior Court, Ontario, Canada, against Musicrypt (MCT-TSX) and two of its officers, John Heaven and Clifford Hunt, claiming CDN$25,000,000 in damages for defamation and injurious falsehood, breaches of the Trade-marks Act and Competition Act, and interfering with Destiny's economic interests.
Destiny CEO Steve Vestergaard said, "Destiny's proprietary Play MPE digital media distribution system has been overwhelmingly embraced in the U.S. market, where it has been used to distribute more than ten times as many pre-release songs to radio and other trusted recipients in the U.S. as the nearest competitor. We recently launched Play MPE in Canada, and several music labels, including two major labels, have already begun servicing radio stations in this market using our system.
"Musicrypt has threatened a number of Destiny's Canadian customers with legal action merely for using our Play MPE system. Musicrypt, Mr. Heaven and Mr. Hunt have sent letters and made phone calls to our customers making a number of inaccurate and misleading statements that are defamatory to Destiny, and that appear intended to damage our business reputation and economic interests in Canada. We are therefore taking legal steps to ensure that our shareholders are fairly compensated for the harm caused by the defamatory statements being made about our system, and to prevent our customers from facing such threats in future."
In 2005, Destiny learned that Musicrypt had sent letters to Play MPE (then known as Promo Only MPE) customers claiming that content that originated in the U.S. and distributed through Play MPE was infringing Musicrypt's Canadian patent 2,407,774 (the "774 patent") issued that year. "As we have set out in our statement of claim, we believe that this patent is not valid, as there are numerous examples of prior art, including Destiny's own MPE software engine which has been available since 1999. We also believe that our Play MPE system does not even contain the essential features described in the 774 patent, so does not infringe the patent," Vestergaard explained.
Accordingly, on March 7, 2006, Destiny filed a statement of claim in the Federal Court of Canada, seeking a declaration that the Play MPE system does not infringe the 774 patent, and that the 774 patent is invalid. Musicrypt counterclaimed for specified damages for infringement of the patent. On January 11, 2007, the Federal Court ordered that issues related to any monetary compensation for infringement be heard after determination of the invalidity and infringement issues. Documents associated with this action are available at http://clipstream.com/dsnyarchives/invalidity.
Destiny encourages any customers that have received a letter or have been threatened in any way for using its system in Canada to immediately contact Destiny to discuss the matter.
According to Vestergaard, “The appropriate place to decide the patent issues is in the Federal Court action started by Destiny. Musicrypt, Mr. Hunt and Mr. Heaven know about the challenge to the validity of their patent in the litigation, yet they continue to make misleading allegations regarding Musicrypt’s patent rights and the litigation without mention of the challenge. They know that our system launched before they even applied for a patent and that we believe our system is a clear example of prior art. We also have claims over our intellectual property, but choose to compete based on the merits of our product.”
Destiny has a U.S. patent pending (publication number 20020146122), "Digital Media Distribution Method and System," with a filing date of April 4, 2002 and claiming priority from March 3, 2000. In addition, Destiny has filed a provisional patent application for proprietary forensic watermarking technology that allows labels to identify the source of unauthorized media files.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of competitive products and pricing, product demand and market acceptance, new product development, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.